Shimon Peres, the Israeli statesman and Nobel peace laureate,said on Saturday that the Arab League must act to help defeat the radical Islamist militant group Islamic State (IS), and called on religious leaders to condemn the group's misuse of religion and values.

Peres said it was key that the local population got behind the fight against terror, and that they should participate in the fight.

"Charge the Arab League in the name of the United Nations to handle this problem," Peres told CNBC in an interview at the Ambrosetti Forum in Italy.

"They must do something. I mean, they have as many aeroplanes as other countries have. They have armies, they have strength, they have money. Gentlemen – you also have to defend yourself."

In recognizing that the militant group is misusing religious teaching to justify violence, religious leaders could help the fight against extremism, the former Israeli president said. "That must be said clear and loud."

The group must then be isolated to restrain it, and the supply of money and arms to IS needs to dry up, he said.

MENAHEM KAHANA | AFP | Getty Images

"Not just against them but also against others who support them. For example, if Doha wants to help them, Doha must be punished. I think it must be overall clear sanction," Peres said.

His comments come soon after IS executed two American journalists. U.S. President Barack Obama called for allied support a NATO summit in Wales on Friday in a campaign to destroy the militants the country is battling in Iraq. The group has attracted many volunteers from the West, sparking alarm in Britain and the United States over the radicalization of Muslims.

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Peres suggested fighting terror should be the job of governments, while building societies should be the job of global companies.

"Since global companies don't have a government, they are free," he said. "For all companies, if terror continues, you lose. You have to participate in fighting terror. In your own ways. Not by arms."

"No CEO or investor would like to come back home, and his boy and girl would ask his father: 'are you exploiting the poor people to make money?'. He says, 'no, no, I am serving the community'."

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